French Company Potentially Could Solve Balkanization of the Internet” 🇫🇷

Net Neutrality May Yet Be Achievable…Maybe

Years ago now Google quietly announced its “Loon Balloon Project” in New Zealand. The objective was to launch high altitude balloons that could potentially float over areas of the globe that did not yet have Internet access. The tech press predicted that the idea was “loony” indeed, though some called it “crazy cool.” Google has since also dabbled with the idea of low earth orbit satellites to achieve the same goal. With the rise of SpaceX, this seems an even more interesting technological approach, though other firms in the 1990s lost large amounts of money and failed.  A modest aerospace company and a subsidiary of Airbus in Toulouse France is manufacturing low-orbit internet access satellites, hoping to launch as many as 650 such satellites in a “global constellation”. The idea that is captivating me is the potential for space-based Internet access to potentially provide an alternative to growing political and corporate control and Balkanization of the Internet.

OneWeb Launches First Six Internet Access Satellites

Ariane Soyuz rocket launch with six OneWeb satellites on board. February 27, 2019

Political Internet Censorship And Access In Developing World Potentially Solvable

But business challenges and technical problems remain

Source: Satellites may connect the entire world to the internet – A worldwide web in space

 The Economist | Briefing

Dec 8th 2018| TOULOUSE

Aclear plastic box the size of a sofa sits in an underground factory in the suburbs of Toulouse in southern France. Inside it, a nozzle fixed to a robot arm carefully drips translucent gloop onto bits of circuitry. This is to help get rid of excess heat when the electronics start to operate. The slab that is created is then loaded onto a trolley and taken away as the next piece of electronics arrives for the same treatment.

This is what the mass production of satellites looks like. Making them in quantity is a necessity for OneWeb. The company was founded in 2012, and it has yet to launch a single satellite. Yet it plans to have 900 in orbit by 2027. That seems a tall order. Intelsat, the firm which currently operates more communications satellites than any other, has been around for 54 years and has launched just 94.

OneWeb, which is part-owned by Airbus, a European aerospace giant, and SoftBank, a Japanese tech investor, needs such a large quantity of satellites because it wants to provide cheap and easy internet connectivity everywhere in the world. Bringing access to the internet to places where it is scarce or non-existent could be a huge business. Around 470m households and 3.5bn people lack such access, reckons Northern Sky Research, a consultancy. OneWeb is one of a handful of firms that want to do so. They think the best way to widen connectivity is to break with the model of using big satellites in distant orbits and instead deploy lots of small ones that sit closer to the ground.

The rate at which an object orbits depends on how far away it is. At a distance of 380,000km, the Moon takes a month to travel around the Earth. The International Space Station, around 400km up, buzzes round in an hour and a half. In between, at an altitude of about 36,000km, there is a sweet spot where satellites make an orbit once a day. A satellite in this orbit is thus “geostationary”—it seems to sit still over a specific spot. Almost all today’s satellite communications traffic, both data and broadcasts, goes through such satellites.

The advantage of a geostationary orbit is that the antennae that send data to the satellite and those that receive data coming down from it do not need to move. The disadvantage is that sending a signal that far requires a hefty antenna and a lot of power. And even at the speed of light, the trip to geostationary orbit and back adds a half-second delay to signals. That does not matter for broadcasts, but it does a little for voice, where the delay can prove tiresome, and a lot for some sorts of data. Many online services work poorly or not at all over such a connection. And it always requires a dish that looks up at the sky.

Head in the clouds

Ships, planes and remote businesses rely for internet connections on signals sent from geostationary orbit, but this method is too pricey for widespread adoption. Beaming the internet via satellites orbiting closer to the planet has been tried before. The idea was popular at the height of the tech boom of the late 1990s. Three companies—Teledesic, Iridium and Globalstar—poured tens of billions of dollars into the low-Earth orbit (leo) satellite internet. It culminated in the collapse of Teledesic. Although the technology of the time worked, it was very costly and so the services on offer had to be hugely expensive, too. Iridium survived, but as a niche provider of satellite telephony, not a purveyor of cheap and fast internet access.

OneWeb is among several firms that are trying leo satellites again. SpaceX, a rocket company founded by Elon Musk, a tech entrepreneur, is guarded about its proposed system, Starlink, but on November 15th American regulators approved an application for 7,518 satellites at an altitude of 340km (bringing the total for which the firm has approval to nearly 12,000). Telesat, a Canadian firm, has plans for a 512-satellite constellation. LeoSat, a startup with Japanese and Latin American backers, aims to build a 108-satellite network aimed at providing super-fast connections to businesses. Iridium, still in the game, will launch the final ten satellites in its new constellation of 66 by the end of the year. Not to be outdone, a Chinese state-owned firm recently announced the construction of a 300-satellite constellation. In ten years’ time, if all goes to plan, these new firms will have put more satellites into orbit by themselves than the total launched to date (see chart).

These companies want to avoid the technical issues of geostationary satellites by putting theirs into a low orbit, where the data will take only a few milliseconds to travel to space and back. And because signals need not be sent so far the satellites can be smaller and cheaper. OneWeb claims they might weigh 150kg and cost a few hundred thousand dollars, compared with a tonne or more, and tens or even hundreds of millions of dollars, for the geostationary sort.

Floating in a most peculiar way

At 1,200km up, where OneWeb intends its first satellites to operate, they do not sit still in the sky. A satellite overhead will sink below the horizon seven minutes later. That has two consequences. First, to ensure that a satellite is always available to any user, a great many are required. Second, to talk to such a satellite you need an antenna that can track it across the sky.

One way to understand this is as a cellular-phone network turned inside out. On Earth, cell-phone towers are fixed; a user’s phone talks to the closest or least busy one, which may change as the user moves or traffic alters. In OneWeb’s system each satellite is a moving cell tower, circling the Earth from pole to pole in one of 18 orbital planes that look like lines of longitude (see diagram). The 900 cells, each one covering an area of a bit more than 1m kilometres, skim across the Earth at 26,000km an hour. Clever software hands transmission from one satellite to the next as they move into and out of range.

There are three ways to connect to such a network. One is to place an antenna on a terrestrial cell tower, which can use the satellites to get data to and from a mobile-phone network, in place of the fibre optic, microwave or cable links that are normally used. The second is for homes and businesses to have their own ground terminals, smaller and cheaper antenna that can talk to the satellite. The third is for vehicles to have ground terminals. This might be important for driverless cars, which will need to transmit and receive large volumes of data over an area which may be broader than that covered by appropriate terrestrial cellular networks.

In all cases data will make their way to the wider internet through large ground-based dishes, called gateways. An email sent from a house connected to one of the new satellite network, for example, would travel up to a passing satellite, down to a gateway then onward to its destination.

The firms involved today hope to overcome the obstacles confronting the previous generation of leo satellite firms because building and launching hundreds of satellites is now much cheaper. The cost of launch in particular has tumbled in the past decade with the arrival of better rockets and more competition. OneWeb has a contract, reportedly valued at over €1bn ($1.1bn), for 21 launches with Arianespace, a European consortium. Russian-built Soyuz craft will also take 34 to 36 satellites up at a time from either French Guiana or Kazakhstan. OneWeb may later use Blue Origin, a rocket firm owned by Amazon’s founder, Jeff Bezos; it also has a contract for launching single satellites to replace ones that break down with Virgin Orbit. Virgin Group, like Airbus and SoftBank, is an investor in the company. SpaceX intends to launch its satellites on its own rockets.

Space to grow

The bigger challenge is making satellites quickly and cheaply enough to fill up these rockets. It typically takes existing satellite-makers two years to build one after contracts are signed. They are not up to the challenge, says Jonny Dyer, who worked on a Google project that first brought the OneWeb team together (but stayed with Google when the two parted ways). “The supply chain does not scale,” he says. “They’re not used to working at those volumes, and they’re not used to the unit cost.”

OneWeb and SpaceX thus not only have to make new satellites, they have to build a system for building satellites. OneWeb has been doing so in Toulouse for the past two years. Its first satellite was completed in April and ten more will be ready in time for the company’s first launch, some time before February 2019. To step up manufacture, OneWeb is building two copies of its production line in a new factory in Florida. It hopes to have the first satellite from this facility ready before March 2019 and to raise output to ten a week not long after.

The factory floor in Toulouse has separate workstations for propulsion systems, communications payload, solar panels and so on. Satellites in the making move on robot carts from one station to the next. Cameras track the components and look out for errors—misalignments and the like. The finished cube is about the size of a beach ball bedecked with antennae and solar panels. After testing, it is shipped out. The system has had teething problems. The first launch will be more than a year behind schedule. But Greg Wyler, OneWeb’s boss, says he still hopes to offer connectivity in places in higher northern latitudes, such as Alaska and Britain, by the end of 2019.

Putting satellites in place is only part of the problem. How useful they will prove to be depends on designing and building antennae to get data to homes or vehicles that are not close to terrestrial cell towers. “The elephant in the room…has always been the ground terminal,” says Nathan Kundtz, the former boss of Kymeta, which makes antennae. Mr Kundtz says that tracking satellites across the sky mechanically is untenable if the antennae are to be affordable and widely used. His firm does tracking electronically. No moving parts, he says. Teledesic failed in part because no such ground terminal existed in the late 1990s. Fortunately, the necessary electronics have shrunk in size and cost.

Aerial combat

Firms such as Kymeta, along with at least two other companies, Phasor and Isotropic Systems, are producing flat, electronically “steerable” antennae with no moving parts that can send and receive signals from leo satellites. Kymeta’s antenna is the least orthodox. It relies upon the same kind of lcddisplay found in laptops and flat-screen televisions. Instead of using the 30,000 pixels in its screen to display images, it uses them to filter and interpret the satellite signal by allowing it to pass through at some pixels and blocking it at others. Different patterns of pixels act like a lens, focusing the signal onto a receiver beneath them; the pattern shifts up to 240 times a second, changing the shape of the “lens” and thus keeping track of the satellites overhead. Phasor’s system works similarly, but uses an electronically controlled array of microchips to perform the same task. Isotropic Systems, which has said that it is developing an antenna that will be able to receive signal from OneWeb’s satellites, uses an optical system more like Kymeta’s.

Kymeta and Phasor have both said that they do not want to sell antennae directly to consumers, but will focus on businesses, cellular networks, maritime and aviation customers instead. Isotropic Systems has announced that it will use its technology to produce a “consumer broadband terminal” in time for OneWeb’s launch. Once available, consumers are most likely to get the new pizza-size antennae through their internet service providers. But if it is too expensive for people to receive signals on the ground—most of the world’s unconnected are poor—those ventures selling direct to consumers will struggle. Mr Wyler says his firm needs antennae that cost $200 at most for the consumer business to thrive.

Telesat, the next biggest firm in terms of constellation size, is taking a different approach. It does not plan to offer services to consumers directly, but instead is focusing on filling in gaps for cellular networks, as well as businesses, ships and planes. Specialised telecoms companies would buy bandwidth and resell it. In contrast to Messrs Wyler and Musk, and their aspirations for global coverage, Telesat has divided the surface of the planet into thousands of polygons, and modelled exactly in which ones it makes financial sense to offer strong connectivity. This means its constellation needs fewer expensive gateways.

Mr Wyler, in contrast, is known as something of a connectivity evangelist. His first satellite internet firm, o3b (Other 3 Billion), placed large satellites in a higher orbit, providing a connection only slightly slower than a leosatellite. Now owned by ses, a larger satellite company, o3b specialises in providing connectivity to islands that are otherwise cut off. OneWeb’s goal of connecting consumers is largely in the hands of SoftBank, its main investor, which owns the exclusive rights to sell the new bandwidth.

Even if the new satellites bring the internet to people and parts of the planet that have been ill-served up until now, putting ever more objects in space brings another set of difficulties. Satellites in densely packed constellations may crash into each other or other spacecraft. “If there are thousands [of satellites] then they’ll have much higher probability of colliding,” says Mr Dyer. “If there is a collision in these orbits it will be a monumental disaster. At 1,000km, if there’s an incident it will be up there for hundreds of years.” Geostationary satellites, because they do not move relative to each other, are unlikely to collide.

Managing constellations is particularly difficult, says Mr Wyler, because each satellite has only a tiny amount of power to work with (equipping small ones with bigger thrusters would be hugely expensive). So even if a crash were imminent, there would be little that could be done about it other than watch. “What are you gonna do? Nothing. Get popcorn. There’s nothing to do,” says Mr Wyler. OneWeb has designed its constellation so that faulty satellites fall out of orbit immediately to avoid this risk.

Access all areas

The new constellations will also raise tricky questions of national jurisdiction. Countries generally have control of the routers which connect them to the wider terrestrial internet. Satellites threaten that control. The national regulators that OneWeb has talked to are uneasy, says Mr Wyler, because it would create a route to the internet that countries could not monitor. OneWeb’s intention is to build 39 “gateways” on the ground around the world that will beam up and receive traffic from its satellites.

The first is under construction in Svalbard, a remote Norwegian island chain. These access points, and those planned by other firms, present another difficulty. Some countries are willing to share gateways with other countries. Others want their own because they are concerned that third parties will be able to monitor internet traffic, potentially using it to hack data flows of national importance.

Questions remain about whether the businesses involved can do all they promise cheaply enough. But if these companies succeed, their impact will go beyond helping to bring 3.5bn people online. Mr Musk has hazy plans to use Starlink as the foundation for a deep-space network that will keep spacecraft connected en route to Mars and the Moon.

With a network of satellites encircling the planet, humans will soon never be offline. High-quality internet connections will become more widespread than basic sanitation and running water. The leo broadband firms are trying to reinvent the satellite industry. But the infrastructure they are planning will provide a platform for other industries to reinvent themselves, too.

Correction (December 11th, 2018): This piece originally stated that Intelsat has launched 59 satellites in its 54-year history. That is the number of active satellites the firm has in orbit. The firm has successfully launched 94. Sorry.

This article appeared in the Briefing section of the print edition under the headline “A worldwide web in space”

Integration of AI, IoT and Big Data: The Intelligent Assistant

The Evolution of These Technologies Is Clearer

The IoT Tower of Proprietary Babble Is Slowly Crumbling

The Rise of the Intelligent Assistant

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors.  The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT.” Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly. 

 

One of the most important factors influencing these positive developments has been the recognition of the importance of this technology area by major corporate players and a large number of entrepreneurial companies funded by venture investment, as shown in the infographic above. Amazon, for example, announced in October 2018 that it has shipped over 100 Million Echo devices, which effectively combine an intelligent assistant, smart hub, and a large-scale database of information. This does not take into account the dozens of other companies which have launched their own entries. I like to point to Philips Hue as such an example of corporate strategic focus perhaps changing the future corporate prospects of Philips, based in Eindhoven in the Netherlands. I have visited Philips HQ, a company trying to evolve from the incandescent lighting market. Two years ago my wife bought me a Philips Hue WiFi controlled smart lighting starter kit. My initial reaction was disbelief that it would succeed. I am eating crow on that point, as I now control my lighting using Amazon’s Alexa and the Philips Hue smart hub. The rise of the “intelligent assistant” seems to have been a catalyst for growth and convergence. 

The situation with proprietary silos of offerings that do not work well or at all with other offerings is still frustrating, but slowly evolving. Amazon Firestick’s browser is its own awkward “Silk” or alternatively Firefox, but excluding Google’s Chrome for alleged competitive advantage. When I set up my Firestick, I had to ditch Chromecast because I only have so many HDMI ports. Alexa works with Spotify but only in one room as dictated by Spotify. Alexa can play music from Amazon Music or Sirius/XM on all Echo devices without the Spotify limitation. Which brings me to another point of aggravation: alleged Smart TV’s. Not only are they not truly “smart,” they are proprietary silos of their own, so “intelligent assistant” smart hubs do not work with “smart” TV’s. Samsung, for example, has its own competing intelligent assistant, Bixby, so of course, only Bixby can control a Samsung TV. I watched one of those YouTube DIY videos on how you could make your TV work with Alexa using third-party software and remotes. Trust me, you do not want to go there. But cracks are beginning to appear that may lead to a flood of openness. Samsung just announced at CES that beginning in 2019 its Smart TV’s will work with Amazon Echo and Google Home, and that a later software update will likely enable older Samsung TV’s to work with Echo and Home. However, Bixby will still control the remote.  Other TV’s from manufacturers like Sony and LG have worked with intelligent assistants for some time. 

The rise of an Internet of Everything Everywhere, the recognition of the need for greater data communication bandwidth, and battery-free wireless IoT sensors are heating up R&D labs everywhere. Keep in mind that I am focusing on the consumer side, and have not even mentioned the rising demands from industrial applications.  Intel has estimated that autonomous vehicles will transmit up to 4 Terabytes of data daily. AR and VR applications will require similar throughput. Existing wireless data communication technologies, including 5G LTE, cannot address this need. In addition, an exploding need for IoT sensors not connected to an electrical power source will require more work in the area of “energy harvesting.” Energy harvesting began with passive RFID, and by using kinetic, pizeo, and thermoelectric energy and converting it into a battery-free electrical power source for sensors. EnOcean, an entrepreneurial spinoff of Siemens in Munich has pioneered this technology but it is not sufficient for future market requirements.  

Fortunately, work has already begun on both higher throughput wireless data communication using mmWave spectrum, and energy harvesting using radio backscatter, reminiscent of Nikola Tesla’s dream of wireless electrical power distribution. The successful demonstration of these technologies holds the potential to open the door to new IEEE data communication standards that could potentially play a role in ending the Tower of Babble and accelerating the integration of AI, IoT, and Big Data.  Bottom line is that the market and the technology landscape are improving. 

READ MORE: IEEE Talk: Integrated Big Data, The Cloud, & Smart Mobile: One Big Deal or Not? from David Mayes

My IEEE Talk from 2013 foreshadows the development of current emerging trends in advanced technology, as they appeared at the time. I proposed that in fact, they represent one huge integrated convergence trend that has morphed into something even bigger, and is already having a major impact on the way we live, work, and think. The 2012 Obama campaign’s sophisticated “Dashboard” application is referenced, integrating Big Data, The Cloud, and Smart Mobile was perhaps the most significant example at that time of the combined power of these trends blending into one big thing. 

READ MORE: Blog Post on IoT from July 20, 2013

The term “Internet of Things”  (IoT) is being loosely tossed around in the media.  But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so-called machine to machine or M2M communication.  The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet-connected device.

Another key concept is the promise of automated energy efficiency, with the introduction of “smart meters” with data communication capability, and also achieved in large commercial structures via the Leadership in Energy & Environmental Design program or LEED.  Some may recall that when Bill Gates built his multi-million dollar mansion on Lake Washington in Seattle, he had “remote control” of his home built into it.  Now, years later, Gates’ original home automation is obsolete.  The dream of home automation has been around for years, with numerous Silicon Valley conferences, and failed startups over the years, and needless to say, home automation went nowhere. But it is this concept of effortless home automation that has been the Holy Grail.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.”  The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess.  In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.”  I use this term to describe the inability of available technology to meet the market opportunity.  Without convergence, there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

Also, as more Internet-connected devices emerged it became apparent that these devices and apps were a hacker’s paradise.  The concept of IoT was being implemented in very naive and immature ways and lacking common industry standards on basic issues: the kinds of things that the IETF and IEEE are famous for.  These vulnerabilities are only now very slowly being resolved, but still in a fragmented ad hoc manner. The central problem has not been addressed due to classic proprietary “not invented here” mindsets.

The problem that is currently the center of this hairball, and from all indications is not likely to be resolved anytime soon.  It is the problem of multiple data communication protocols, many of them effectively proprietary, creating a huge incompatible Tower of Babbling Things.  There is no meaningful industry and market wide consensus on how The Internet of Things should communicate with the rest of the Internet.  Until this happens, there can be no fulfillment of the promise of The Internet of Things. I recently posted “Co-opetition: Open Standards Always Win,” which discusses the need for open standards in order for a market to scale up.

Read more: Co-opetition: Open Standards Always Win

A recent ZDNet post explains that home automation currently requires that devices need to be able to connect with “multiple local- and wide-area connectivity options (ZigBee, Wi-Fi, Bluetooth, GSM/GPRS, RFID/NFC, GPS, Ethernet). Along with the ability to connect many different kinds of sensors, this allows devices to be configured for a range of vertical markets.” Huh?  This is the problem in a nutshell. You do not need to be a data communication engineer to get the point.  And this is not even close to a full discussion of the problem.  There are also IoT vendors who believe that consumers should pay them for the ability to connect to their proprietary Cloud. So imagine paying a fee for every protocol or sensor we employ in our homes. That’s a non-starter.

The above laundry list of data communication protocols, does not include the Zigbee “smart meter” communications standards war.  The Zigbee protocol has been around for years, and claims to be an open industry standard, but many do not agree. Zigbee still does not really work, and a new competing smart meter protocol has just entered the picture.  The Bluetooth IEEE 802.15 standard now may be overtaken by a much more powerful 802.15 3a.  Some are asking if 4G LTE, NFC or WiFi may eliminate Bluetooth altogether.   A very cool new technology, energy harvesting, has begun to take off in the home automation market.  The energy harvesting sensors (no batteries) can capture just enough kinetic, peizo or thermoelectric energy to transmit short data communication “telegrams” to an energy harvesting router or server.  The EnOcean Alliance has been formed around a small German company spun off from Siemens, and has attracted many leading companies in building automation. But EnOcean itself has recently published an article in Electronic Design News, announcing that they have a created “middleware” (quote) “…to incorporate battery-less devices into networks based on several different communication standards such as Wi-Fi, GSM, Ethernet/IP, BACnet, LON, KNX or DALI.”  (unquote).  It is apparent that this space remains very confused, crowded and uncertain.  A new Cambridge UK startup, Neul is proposing yet another new IoT approach using the radio spectrum known as “white space,”  becoming available with the transition from analog to digital television.  With this much contention on protocols, there will be nothing but market paralysis.

Is everyone following all of these acronyms and data comm protocols?  There will be a short quiz at the end of this post. (smile)

The advent of IP version 6, strongly supported by Intel and Cisco Systems has created another area of confusion. The problem with IPv6 in the world of The IoT is “too much information” as we say.  Cisco and Intel want to see IPv6 as the one global protocol for every Internet connected device. This is utterly incompatible with energy harvesting, as the tiny amount of harvested energy cannot transmit the very long IPv6 packets. Hence, EnOcean’s middleware, without which their market is essentially constrained.

Then there is the ongoing new standards and upgrade activity in the International Standards Organization (ISO), The Institute of Electrical and Electronics Engineers (IEEE), Special Interest Groups (SIG’s”), none of which seem to be moving toward any ultimate solution to the Tower of Babbling Things problem in The Internet of Things.

The Brave New World of Internet privacy issues relating to this tidal wave of Big Data are not even considered here, and deserve a separate post on the subject.  A recent NBC Technology post has explored many of these issues, while some have suggested we simply need to get over it. We have no privacy.

Read more: Internet of Things pits George Jetson against George Orwell

Stakeholders in The Internet of Things seem not to have learned the repeated lesson of open standards and co-opetition, and are concentrating on proprietary advantage which ensures that this market will not effectively scale anytime in the foreseeable future. Intertwined with the Tower of Babbling Things are the problems of Internet privacy and consumer concerns about wireless communication health & safety issues.  Taken together, this market is not ready for prime time.

 

https://www.slideshare.net/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not

Updating My Smartphone Market Analysis: The Market Is At A Strategic Inflection Point

NOTE: My original post, originally published in January 2013, continues to be one of the most viewed on the site.  Android and Apple have enjoyed an estimated 98% market share between the two, and many of my earlier projections regarding this market appear to have been borne out. However, the smartphone market has now matured to the point that it is at a strategic inflection point which has major implications for the future of this market and the major competitors. 

The Rapid Maturation of the Smartphone Market Should Have Been Foreseen

The signs of a dangerous strategic inflection point in the global smartphone market have been evident for some time: the rapid rise of domestic Chinese competition combined with the predictable end of the Western consumer fascination with “the next smartphone.” Five years ago, Samsung Electronics, the South Korean technology giant sat atop the Chinese market, selling nearly one of every five devices there. Today, Samsung is an also-ran, controlling less than 1% of the world’s largest smartphone market. Samsung has trimmed local staff and last month closed one of its two Chinese smartphone factories.  Surely, Apple must have been aware of this and the growing number of much lower cost domestic Chinese competitors that were already hammering Samsung.  Apple’s release of a lower cost iPhone, the XR, in Asia in October 2018 appears to have been a case of too little too late. Sales of the device have been disappointing in both Japan and China, and Apple has been relegated to offering “trade-ins” to camouflage slashing the price of the XR.  Apple had ample warning over at least a five year period.

Meanwhile, I sensed a very different kind of maturation of the smartphone market in North America and Europe. In what I like to call the smartphone market “Star Wars” phenomenon, each new generation of smartphones was greeted with a hysteria that was only paralleled by the Star Wars craze. This simply could not continue indefinitely.  Beginning in 2017 it was apparent the smartphone market as a whole was already shrinking, and there was significant anecdotal information in the media that smartphone hysteria was waning, if not publicly available hard data. I began having discussions about this with Tim Bajarin, one of the top Apple analysts.  As Apple moved to launch the iPhone X and broke the $1000 price point barrier it encountered clear if perhaps not overwhelming evidence that the smartphone market was softening: more people chose not to upgrade their phones. I like to say that the last major feature consumers seemed to want/need was water resistance, as so many had already experienced the disastrous “toilet drop.”  I view the Bluetooth earbud phenomenon as a distraction and perhaps a hint of the coming change. Samsung flirted with water resistance as early as the Samsung Galaxy S5, perhaps because water resistance had become a standard feature in the Japanese market. By 2018, water resistance was standardized, and the market began experimenting with “the next big thing” for phones, folding screens. WTF? It was clear to me that the smartphone market had run out of gas, and was undergoing rapid maturation, as phones were no longer fascinating and novel, but just simply commodity devices.

To my mind, and IMHO, this has been a case study in a classic “strategic inflection point” that was missed by both Samsung and Apple. Samsung might be forgiven for being the first to cross into the inflection point, while the media was still promoting “the next smartphone” hysteria, and not yet recognizing the sense of the market. Apple has no such excuse. The rapid maturation of the smartphone market should have been foreseen by Apple. Apple’s most disturbing move was the decision to increase pricing rather than delivering greater value, at exactly the wrong time. The crucial rhetorical question is what are the larger implications for Apple’s future business?

READ MORE:  Apple Beware: Samsung’s Fall in China Was Swift 

READ MORE: Samsung Profit Outlook Surprisingly Weak

 

Vendor Data Overview

Smartphone vendors shipped a total of 355.6 million units worldwide during the third quarter of 2018 (Q3 2018), resulting in a 5.9% decline when compared to the 377.8 million units shipped in the third quarter of 2017. The drop marks the fourth consecutive quarter of year-over-year declines for the global smartphone market. 

Quarter	2017Q1	2017Q2	2017Q3	2017Q4	2018Q1	2018Q2	2018Q3
Samsung	23,2%	22,9%	22,1%	18,9%	23,5%	21,0%	20,3%
Huawei	10,0%	11,0%	10,4%	10,7%	11,8%	15,9%	14,6%
Apple	14,7%	11,8%	12,4%	19,6%	15,7%	12,1%	13,2%
Xiaomi	4,3%	6,2%	7,5%	7,1%	8,4%	9,5%	9,5%
OPPO	7,5%	8,0%	8,1%	6,9%	7,4%	8,6%	8,4%
Others	40,2%	40,1%	39,6%	36,8%	33,2%	32,9%	33,9%
TOTAL	100,0%	100,0%	100,0%	100,0%	100,0%	100,0%	100,0%

 

 

 

2009 to 2012

In one of the most interesting high tech scenarios in years, the “smart mobile” OS (operating system) market is shaping up to be a classic Battle of the Titans. Key strategic issues, theories, speculation, and money, lots of it, are making this a great real-time strategy and marketing case study for management students of all ages (smile).  So as Dell prepares to fade into the sunset, get yourself a drink of your choice, and some popcorn, sit back and watch it all unfold.

The best metaphor I can apply to this might be a “destruction derby” featuring at least two players,  or perhaps a bizarre multidimensional Super Bowl or Rugby World Cup match, with four teams on one playing field with four goal posts at each cardinal point of the compass..  At the moment all four teams are tackling, passing, and running at each other in a confused pile. There are scrums, rucks and mauls in multiple locations. Two competitors, Google and Apple appear to be winning. The other two, Microsoft and Research in Motion, are pretty banged up, but still playing.

The two currently dominant competitors, Google Android with its acquisition of Motorola Mobility, and Apple IOS are rapidly consolidating and expanding their global market positions, via partnerships, vertical integration, and application development ecosystems. Microsoft has publicly committed to spending massively to make Windows 8 the third OS option, but a recent IDC mobile OS market forecast projects Microsoft with only a miniscule share in 2015.  Something tells me that Steve Ballmer will go on a rampage if that happens, rather like the video of him screaming and dancing on stage in my post “Extrovert or Introvert, Authentic Presentations Take Practice,” November 30th. http://mayo615.com/2012/11/30/introvert-or-extrovert-authentic-presentations-take-practice/

The key question is whether Microsoft or RIM, will be able to establish a third mobile OS to a survivable market position.  It is not at all clear that either can do so at this point.  The market is also speculating that mobile hardware market leader Samsung, is possibly considering making its own play by creating its own mobile OS ecosystem.  While this may seem far fetched, this kind of vertical integration seems to be making a resurgence as a strategic move, after having been discredited.  Then there is the perennial Nokia, who has seemed to be on death’s door, but may be coming back. As a strategic partner for Microsoft, Nokia’s fate may have a huge bearing on Microsoft’s strategy to reinvent itself as the PC goes into atrial fibrillation. Will Amazon enter the fray with its own smart phone entrant, and if so, with whose OS?  Will Research in Motion and the Blackberry be able to achieve a survivable market share, or is RIM already a walking zombie?

Finally, in a kind of death dance patent dispute reminiscent of the film, Gladiator, Nokia and RIM are now locked in new lawsuits and counter-lawsuits, as if to say, “If neither of us are going to survive, we might as well kill each other for the entertainment value.”

Here’s a more concise overview of the race to be the third mobile platform:

• The argument in favor of a third platform is straightforward and compelling: A new, robust competitor will prevent the dominant platforms from growing complacent or stifling innovation. Apple and Google are pretty happy with the status quo. Consumers are probably not consciously pining for a third mobile platform. Developers would happily get behind a third platform if it widened their revenue streams.
• Microsoft has a head start: It launched Windows Phone in 2010, and tablet-friendly Windows 8 this year. It is experienced in building developer communities. However, Windows Phone has so far only managed a paltry 3 percent platform market share.
• Amazon has the most potential to upend the market: A smartphone would be a natural extension of Amazon’s distribution empire, and its Kindle Fire tablet play. Unfortunately, the most recent E-reader forecasts show them in sharp decline as growth in full-functional tablets squeeze them out.  Amazon has 106 million unique visitors accessing its sites, many of them with credit cards on file. 
• Samsung is a dark horse: Its dependency on Android may become a liability and push the South Korean manufacturer into the platform business. Samsung’s strength is its hardware sales prowess — Samsung shipped over 56 million smartphones in the third quarter of 2012. 

Read more: http://www.businessinsider.com/bii-report-the-race-to-be-the-third-mobile-platform-2013-1#ixzz2IepLaaka

For Management students, this real time case study offers the opportunity to apply and ponder:

1. The time tested 1976 Boston Consulting Group (Bruce Henderson) “rule of three and four.”  In a stable mature market there can be no more than three surviving competitors, the largest of which can have no more than four times the share of the smallest of the three.   Here, the question is whether a third competitor can successfully emerge at all?

2. Barriers to market entry. Former Intel Marketing VP, Bill Davidow‘s book, Marketing High Technology, An Insider’s View, still considered the standard on the topic, suggested his own metric for a barrier to a new market entrant, or even a competitor just struggling to survive the market shakeout. The market entry barrier rule of thumb in dollars is three-quarters the most recent annual revenue of the market leader. In this case, that is a very big B number…  Microsoft has the bucks, but is it just too late?

3. Vertical integration. Rumors of Samsung introducing its own mobile OS seem implausible, but hey Nvidia just announced its own gaming console to compete with Microsoft, Nintendo, and Sony.

4. Resources and capabilities. It is necessary to consider the respective resources and capabilities of each of the many direct players, and those playing in related markets that bear on the mobile OS market.

5. Related markets, new markets, peripherally involved competitors and products which all could play a role in the eventual outcome of this. The integrated Internet HDTV market is only one example. Featuring Apple, Microsoft, Google, and Samsung, and the HDTV manufacturers, it could influence things.  What if Amazon were to vertically integrate and introduce its own smart phone?

This is the hairball of this Century so far.  Are you all still with me, here?

Richard Florida Writes That Canada Is Losing The Global Innovation Race – Globe and Mail

Canadian Venture Investment Is In Decline

Canada’s investment in R & D Has Been Anemic For Decades Compared to OECD Nations

U.S. Tech Giants Are Exploiting Canada’s Talent Base At The Expense of Canadian Startups

My long-time business partner and I, one of us in Canada and the other in Silicon Valley, last year launched a business targeted at bringing immigrant entrepreneurs to Canada, Vendange Partners. http://www.vendangepartners.com.  We spent months analyzing and investigating the Canadian entrepreneurial ecosystem, particularly Vancouver and Toronto, Canadian immigration policy, and the Canadian venture capital industry. What we found was very concerning. Last December, I wrote a blog post here detailing our findings (read more below) that Canada was nowhere close to being the next Silicon Valley. With regard to venture capital, we found that there was a lack of adequate risk capital, which could be traced to deeply rooted conservative values in the Canadian financial industry. Immigration policy was a mixed bag, with a “startup” visa program that had become a magnet for immigration scams.  Despite these disadvantages, we decided to press ahead, and are making progress.

That said, I was very interested yesterday to read the article in the Globe & Mail by University of Toronto Professor Richard Florida, and Ian Hathaway, Research Director for the Center for  American Entrepreneurship, and Senior Fellow at the Brookings Institute. The article by Florida and Hathaway draws the same conclusions as my research, providing even more precise data to support their disturbing conclusions. It is not hard to find many additional articles on these issues.  Ironically, also yesterday, a LinkedIn connection shared a post by Sciences, Innovation, and Economic Development Canada with a very upbeat, positive assessment of venture capital for startups in Canada. This is the essence of the problem. Since I came to Canada years ago now, I have seen a pollyannaish state of denial about the true situation for entrepreneurship, immigration policy, and the lack of “smart” venture capital for Canadian startups. No amount of counter-evidence has changed this mistaken rosy outlook. Without a recognition of these problems, nothing will change.

 

READ MORE: Canada Woos Tech Startups But Canada Is Not Silicon Valley December 20, 2017, mayo615.com blog post

OPINION

RICHARD FLORIDA AND IAN HATHAWAY

SPECIAL TO THE GLOBE AND MAIL

UPDATED NOVEMBER 2, 2018

Solving Canada’s startup dilemma

Source: Solving Canada’s startup dilemma – The Globe and Mail 

Canada, we increasingly hear, is becoming a global leader in high-tech innovation and entrepreneurship. Report after report has ranked Toronto, Waterloo, and Vancouver among the world’s most up-and-coming tech hubs. Toronto placed fourth in a ranking of North American tech talent this past summer, behind only the San Francisco Bay Area, Seattle, and Washington, and in 2017 its metro area added more tech jobs than those other three city-regions combined.

All of that is true, but the broader trends provide little reason for complacency. Indeed, our detailed analysis of more than 100,000 startup investments around the world paints a more sobering picture. Canada and its leading cities have seen a substantial rise in their venture capital investments. But both the country and its urban centres have lost ground to global competitors, even as the United States’ position in global start-ups has faltered.

Overall, Canada ranks fifth among countries in the number of venture capital deals and sixth in venture capital investment, trailing only the United States, India, China, Britain, and Germany. That said, Canada’s share of the world’s venture capital investment is tiny, just 1.5 percent. And it has actually declined over the past decade and a half.

But start-ups and entrepreneurship are a local phenomenon: They happen in urban areas. The good news is that a dozen or so of Canada’s cities make the list of the world’s 300-plus startup hubs. And the three largest of them – Toronto, Montreal, and Vancouver – rank among the world’s 62 leading global startup hubs.

Toronto, Canada’s top-ranked startup hub, is the only Canadian city to crack the list of the world’s top 25 startup cities. Vancouver and Montreal are in the top 50. Kitchener-Waterloo leads all Canadian cities in venture capital investment per capita, ranking 26th globally on that measure. It and Ottawa also rank among the world’s top 100 startup hubs in terms of capital invested, and Calgary is among the top 150.

The not-so-good news is that Canada and its startup cities are losing ground to startup hubs such as New York and London; Beijing and Shanghai; Bangalore and Mumbai; Berlin, Amsterdam, Stockholm, and Tel Aviv.

More worrying, Canada is failing to take advantage of the United States’ weakening position, which is attributable in part to its tighter immigration policies. While the U.S. continues to generate the largest amount of startup and venture capital activity, its share of the global total has been falling steadily, from more than 95 percent in the mid-1990s to about two-thirds in 2012, and a little more than half today. But the country that has gained the most ground is China, which now attracts nearly a quarter of global venture capital investment.

Exactly why Canada is lagging is unclear. A growing number of Canadian commentators suggest that the influx of large U.S. and Asian tech firms into Canada is sucking up tech talent that would have otherwise gone to local start-ups. But companies like Microsoft and Google are such powerful talent magnets that they are more likely to increase the overall supply. After all, San Francisco, New York, and London are homes to some of the biggest tech companies in the world, and they are also leading startup hubs.

Perhaps the brunt of Donald Trump’s anti-immigration policies has yet to be fully felt. Maybe it is because New York and the San Francisco Bay Area are close enough to lure Canadian entrepreneurs away, or maybe we are just not as entrepreneurial as we like to think.

Whatever the cause, Canada and its leading tech hubs must do more to grow their ecosystems, which already enjoy such clear advantages in talent, especially in the field of artificial intelligence, and their openness to immigration. Given the role that innovation and start-ups play in propelling economic growth and raising living standards, our economic future depends on it.

Richard Florida is University Professor at the University of Toronto’s School of Cities and the Rotman School of Management. Ian Hathaway is Research Director of the Center for American Entrepreneurship and a Senior Fellow at the Brookings Institution. They are authors of the Rise of the Global Startup City, released earlier this month.

READ MORE: Rise of The Global Startup City

Another Silicon Valley Reckoning Is Coming: “Star Entrepreneurs” and Way Too Much Money

Another Silicon Valley reckoning is on the horizon.  We have seen cyclical events like this before, the 2001 bubble burst being the most recent memorable reckoning. The talk in 2001 was about too much “dumb money.” The coming reckoning, however, is on a massive, unprecedented scale, fueled by the same excess of global capital that has fueled the bubbles in housing markets in attractive locations around the World. The problems with Uber, Travis Kalanick, and the now obvious difficulty of the Uber Board of Directors to exercise meaningful governance should have been the “canary in the coal mine.” CNBC’s reporting on the excessive Silicon Valley “unicorn” valuations and media reports that New Enterprise Associates would divest $1 Billion in startup investments that cannot be made liquid has now made the situation blatantly obvious. After a long silence, the Wall Street Journal has finally joined the reporting on the crisis. What more does one need to take to the exit?

 

Source: In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay – WSJ

In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay

Silicon Valley financiers are losing leverage to star entrepreneurs

Two brothers who are co-founders of online payments startup Stripe, John Collison, left, president, and Patrick Collison, chief executive, have supervoting shares in the company, which was valued at $9 billion in its latest round of fundraising. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

The Wall Street Journal

By Rolfe Winkler and Maureen Farrell

May 28, 2018 4:25 p.m. ET

Founders of highflying startups are increasingly wresting control of their companies from venture-capital backers and extracting huge pay packages tied to going public.

Venture capitalists had long called the shots in startup boardrooms and continue to be the primary backers of private companies. But in recent years they have had to compete against new classes of investors including mutual funds, sovereign-wealth funds and now Japan’s SoftBank Group Corp. , which has a $92 billion Vision Fund investing in startups.

That has reduced their leverage, shifting power toward star entrepreneurs and adding pressure on VCs to cultivate “founder friendly” reputations that will help them get a piece of the next hot startup. The flood of capital also gives entrepreneurs the ability to pick not just their investors but also when and whether to go public. An initial public offering is the primary way in which VCs cash in on their gains from startup investments.

VCs say empowering founders—through special voting shares, governance rights and other tools—frees them to follow ambitious long-term strategies once their companies go public without having to worry that poor performance will bring pressure from activist investors that scoop up stock. They point to founder-controlled tech companies such as FacebookInc., where founder Mark Zuckerberg had power to make bold moves and resist early pressure to sell the company. Facebook, which went public at around $100 billion, is now valued at roughly five times that.

Venture-capital backers of Stripe Inc., whose software is used by businesses to accept and track digital payments, recently gave the company founders an incentive to go public: special supervoting shares. The move was meant partly to assuage the founders, brothers Patrick and John Collison, that they would keep significant control of the company they founded in 2010 if it went public, people familiar with the matter said.

Many of Stripe’s investors say the founders have earned the right to control the company because it has performed so well. It was valued at $9 billion in its last fundraising round. Until March, when Stripe added its first independent director, the Collison brothers’ only fellow director was Michael Moritz, a partner at Sequoia Capital, one of the company’s earliest investors. Stripe and Sequoia representatives declined to comment.

Glenn Kelman, the longtime chief executive of online real-estate brokerage Redfin Corp.that went public last July, said that in the run-up to the IPO he was pushed to be more disciplined with expenses by two big investors who traditionally buy public-company stocks but also back later-stage private companies. Redfin’s shares are up about 50% since the IPO.

“There is a new world of VCs who really can’t perform their governance functions on boards because they want to preserve their relationship with you,” Mr. Kelman said of the venture-capital industry.

Star founders of private companies often get to pick their own investors, but as public-company CEOs they can’t. Supervoting shares—typically a second class of stock held by insiders that have 10 votes per share—give founders more power to elect directors and approve other items up for shareholder vote and protect them from investors who may have different priorities.

Last year, 67% of U.S. venture-backed tech companies that staged IPOs had supervoting shares for insiders, according to Dealogic, up from 13% in 2010. The proportion of non-tech U.S. venture-backed IPOs with supervoting shares has stayed between 10% to 15% every year over that period.

The proportion rises as tech companies get larger: 72% of founders of U.S. tech startups valued over $1 billion that had IPOs over the past 24 months have supervoting shares, according to a Wall Street Journal analysis.

Empowering a founder has risks. Uber Technologies Inc. co-founder and former CEO Travis Kalanick built a ride-hailing juggernaut valued at $68 billion with a pugnacious leadership style, but that approach ultimately contributed to a series of scandals. His supervoting shares and de facto control of the board made it more difficult for investors to push him out.

They did so last year, and then abolished supervoting rights and adopted a “one share, one vote” policy ahead of a planned 2019 IPO, something Mr. Kalanick ultimately voted in favor of.

Spotify Technology SA’s shareholders issued special “beneficiary certificates” to its founders in February, in part because co-founder and Chief Executive Daniel Ek wanted to maintain control, a person familiar with the arrangement said. The certificates boosted Mr. Ek’s and his co-founder’s voting control to a combined 80.5%, double their economic ownership. Spotify listed its shares in April. A Spotify spokesman declined to comment.

Snap Inc., whose two co-founders control about 90% of its voting power, sold shares with no voting rights in its 2017 IPO, meaning public-market investors don’t have any say on corporate matters.

Evan Spiegel, co-founder and CEO of the Snapchat parent, received a $625 million stock package that vested with the IPO as an incentive to get it done, people familiar with the deal said.

Drew Houston, co-founder and CEO of online-storage company Dropbox Inc., in December got his own stock package worth potentially $590 million partly tied to his company’s March IPO, according to offering documents. The stock vests based on Dropbox’s share price, among other milestones, and he can earn the full amount only if shares reach $90, triple their current value. Mr. Houston already holds nearly $3 billion of Dropbox’s shares.

Bankers and lawyers who work on IPO deals say there is little precedent for big stock packages offered to founders ahead of public offerings, a reflection of venture-capital firms’ decreasing leverage. Snap and Dropbox representatives declined to comment.

Some star founders may even be emboldened to overstep boardroom norms.

WeWork Cos. co-founder and Chief Executive Adam Neumann, who has 65% voting control, is one of two members of his board’s compensation committee, along with longtime company investor Benchmark, according to WeWork’s recent bond-offering documents. Public companies aren’t usually allowed to have their executives on compensation committees—which set executive pay—to avoid conflicts.

A WeWork spokesman said Mr. Neumann takes $1 a year in salary and declined to comment on whether he receives stock compensation or recuses himself from committee discussions of his pay. It is unclear when WeWork will tap the public markets, but the company’s $4.4 billion investment from SoftBank in 2017 was seen as pushing out its need for a public offering potentially for years.

WeWork bond documents show that in 2016 and 2017, the company paid more than 1.3 million shares of class B stock compensation, worth more than $50 million at the company’s current valuation. Mr. Neumann controls 78% of class B shares, which come with supervoting rights.

—Eliot Brown contributed to this article.

Write to Rolfe Winkler at rolfe.winkler@wsj.com and Maureen Farrell at maureen.farrell@wsj.com

Big Idea Social Entrepreneur: The New 21st Century Career

Late last year I wrote on this blog about my frustration with the lack of Big Ideas driving innovation. My rant was stimulated by a New York Times article on the grim underbelly of the “an app for everything” culture: people who were working on “small ideas,”  and losing their shirts in the process.  I also shared the thoughts of other entrepreneurial leaders, investors, and journalists, also bemoaning the fact that we seem to have lost our way, and are no longer thinking BIG.  This morning I stumbled on a post on the HBR Blog Network, entitled “Idea Entrepreneur: The New 21st Century Career.” I took some editorial license and added the words “Big”  and “Social” to my blog post, simply because the author was actually making the case for Big Ideas and Social Entrepreneurship, and the hopeful sign that there may be a re-emergence of people who care about Big Ideas.  Read my original post here, followed by the HBR Blog post.

The concept of “social entrepreneurship” has noticeably taken off with this generation of young people. While there some debate about the definition of “social entrepreneurship,” I am comfortable with the following explanation.

A social entrepreneur is a person who pursues novel applications that have the potential to solve community-based problems, both large and small. These individuals are willing to take on the risk and effort to create positive changes in society through their initiatives.

Examples of social entrepreneurship include microfinance institutions, educational programs, providing banking services in underserved areas and helping children orphaned by epidemic disease. Their efforts are connected to a notion of addressing unmet needs within communities that have been overlooked or not granted access to services, products, or base essentials available in more developed communities. A social entrepreneur might also seek to address imbalances in such availability, the root causes behind such social problems, or social stigma associated with being a resident of such communities. The main goal of a social entrepreneur is not to earn a profit, but rather to implement widespread improvements in society. However, a social entrepreneur must still be financially savvy to succeed in his or her cause.

I had the good fortune of working with the global social entrepreneurship NGO,  Enactus and a group of my students from the UBC Faculty of Management. We interacted with other social entrepreneurship groups as far afield as Perth, Australia, and Rotterdam in the Netherlands to develop our own project. Enactus categorizes projects by the potential for the project to become self-sustaining by the participants, and the original project volunteers working themselves out of a job. Our project was designed to meet the highest categorization within Enactus. We designed a roof-top hydroponic vegetable garden project that would produce high yield cash crop fruits and vegetables for the homeless community, managed by a local housing organization.  The end goal was to enable the homeless volunteers to take over the operation, generate income for themselves, and collaborate with the charity organization to enter into simple permanent housing.

Read more: What Makes Social Entrepreneurs Different?

Read more: http://mayo615.com/2012/11/18/app-development-booms-depressing-underbelly-what-ever-happened-to-big-ideas/

“Big” Idea Entrepreneur: The New 21st Century Career

Reblogged from the HBR Blog Network

by John Butman  |  10:00 AM May 27, 2013

Read more: http://blogs.hbr.org/cs/2013/05/idea_entrepreneur_the_new_21st.html

There is a new player emerging on the cultural and business scene today: the idea entrepreneur. Perhaps you are one yourself — or would like to be. The idea entrepreneur is an individual, usually a content expert and often a maverick, whose main goal is to influence how other people think and behave in relation to their cherished topic. These people don’t seek power over others and they’re not motivated by the prospect of achieving great wealth. Their goal is to make a difference, to change the world in some way.

Idea entrepreneurs are popping up everywhere. They’re people like Sheryl Sandberg (Facebook COO and author of Lean In), who is advocating a big new idea from within an organization. And like Atul Gawande (the checklist doctor), who is working to transform a professional discipline. Or like Blake Mycoskie (founder of TOMS shoes), who has created an unconventional business model.

In my research into this phenomenon (which forms the basis of my book, Breaking Out), I have been amazed at how many different kinds of people aspire to be idea entrepreneurs. I have met with, interviewed, emailed or tweeted with librarians, salespeople, educators, thirteen-year-old kids, marketers, technologists, consultants, business leaders, social entrepreneurs — from countries all over the world — who have an idea, want to go public with it, and, in some cases, build a sustainable enterprise around it.

The ones who succeed — whether it’s disrupting an established way of doing business as Vineet Nayar has done with his company or bringing a mindset change to a small community like Maria Madison has done in Concord, Massachusetts — share the following methods:

• They play many roles. They are manager, teacher, motivator, entertainer, coach, thought leader, and guru all rolled into one. Think Reid Hoffman (founder of LinkedIn and author of The Start-Up of You), Daniel Pink (author of Drive) or, in India, Kiran Bedi, leader of a worldwide movement to transform prisons and root out corruption.

• They create a platform of expressions and generate revenue to support their social activities. Idea entrepreneurs have to be exceptionally good at expressing their idea, and usually do so in many forms. They give private talks and major speeches, write books and blogs and articles, participate in panels and events, engage in social media — activities that can generate revenue (sometimes in considerable amounts), through a combination of fees, sales of their expressions, and related merchandise. Jim Collins has created a long-lasting enterprise supported by the sale of books and media, as well as fees for consulting, speaking engagements, and workshops.

• They offer a practical way to understand and implement their idea. Because people have a hard time responding to an abstract idea, the idea entrepreneur develops practices (and personally models them, too) that lead people to the idea through action. Bryant Terry, an “eco-chef” who argues that good nutrition is the best path to social justice, embeds his ideas in cooking methods and suggestions for social interaction around good food.

• They draw other people into their idea. The idea entrepreneur gathers people into the development, expression, and application of their idea. They form affiliations, build networks, and form groups. Al Gore created the Climate Reality Project Leadership Corps to bring his ideas about environmental sustainability to people around the world. Eckhart Tolle, a spiritual leader and author of The Power of Now, has established the online Eckhart Teachings Community with members in 130 countries. This inclusion of many people in many ways creates a phenomenon I call respiration— it’s as if the idea starts to breathe, and takes on a life of its own.

• They drive the quest for change. It is all too common that people with an idea for an improvement or a change to the world are satisfied to point out a problem, propose a solution, and then expect others to execute. The idea entrepreneur, however, sees the expression of the idea as the beginning of the effort — and it can be a lifelong one — in which they will continue to build the idea, reach new audiences, and offer practices that lead to change. Dr. Bindeshwar Pathak, based in Delhi, believes that world-class sanitation is necessary for India to realize its full potential. In forty years of idea entrepreneurship — spent in writing, speaking, travelling, network building, and technology development — he has influenced the way millions of people think and act.

People who have shaped our thinking and our society over the decades, even centuries, and continue to do so today — from Benjamin Franklin to Mohandas Gandhi to Hannah Salwen, an American teenager who modeled a disruptive approach to philanthropy — have followed the path of the idea entrepreneur.

These days, the model is well-defined and, thanks to the amazing range of activities we have for creating and sharing ideas, is within reach for just about anyone. If you have an idea, and want to go public with it, idea entrepreneurship can be one of the most powerful forces for change and improvement in the world today.

OECD Apparently Believes Global Tax Evasion Is A Legacy Issue: A Pigs Will Fly Moment

Tax avoidance is allegedly a ‘legacy issue,’ OECD’s Angel Gurria says

• Gurria was Speaking at the Confederation of British Industry (CBI) conference in London
• He said governments were working hard to stop tax avoidance and evasion
• U.K. Prime Minister Theresa May said her government is continuing to work against tax evasion

Published 12 Hours Ago CNBC.com

Photographer | Collection | Getty Images

Amid another leak of documents revealing large-scale international tax avoidance, the secretary-general of the Organisation for Economic Co-operation and Development (OECD) said Monday that tax avoidance was fast becoming a thing of the past.

“When we’re talking about the ‘Panama Papers’ or ‘Paradise Papers’we’re talking about a legacy that is fast disappearing,” Angel Gurria said.

Speaking at the Confederation of British Industry (CBI) conference in London, Gurria said governments were working hard to stop tax avoidance and evasion.

“When we talk about ‘Double Irish’ or ‘Double Dutch’ (tax avoidance schemes) we’re talking about structures which are no longer there,” she said, adding: “This will not be repeated because of the work you and your governments and the OECD have done in the last few years.”

“There is quite literally no place to hide,” he said, noting that 50 countries had implemented automatic information exchanges regarding tax and that more nations were planning to do the same.

Gurria’s comments come after a leak of millions of documents revealing large-scale tax avoidance by high-profile individuals and companies via offshore financial services companies. The latest tax avoidance leak has been dubbed the “Paradise Papers” and comes after a similar leak in 2016 called the “Panama Papers” that showed how a Panamanian law firm allegedly helped its clients to avoid taxes by using offshore tax havens.

Speaking at the same business conference on Monday, U.K. Prime Minister Theresa May said that her government had continued the work against tax evasion that her predecessor David Cameron had begun.

“He started this work, not only in the U.K. economy but on an international stage. So we have seen more revenues coming into HMRC (the U.K.’s tax-collecting department) over the last few years, with £160 billion extra since 2010,” she said.

More work was being done to ensure “greater transparency” in the U.K.’s dependencies and British overseas territories, May said, and HMRC was already able to access more information about so-called “shell” companies.

“We want people to pay the tax that is due,” she said. That sentiment was echoed by the leader of the opposition Labour party, Jeremy Corbyn, who said that society was “undermined” by anyone that did not pay the tax they owed.

CMIG , new owner of Grouse Mtn. has ties to Anbang Insurance

From The Globe and Mail:

https://www.theglobeandmail.com/news/world/grouse-mountain-acquisition-just-the-start-for-chinese-investment-firm-banker-says/article35699906/

Via The Globe and Mail’s Android app

Uber is Enron Deja Vu: Culture Trumps Strategy

A Silicon Valley Tragedy

Remember Enron’s “Smartest Guys in the Room?”

An early photo of Uber’s management team

Why did Uber spin so wildly out of control?

For over a  year now I have blogged here about the red flags flying about Travis Kalanick and Uber. Many investigative articles have been published over this time, in the New York Times and other publications, which have raised disturbing questions about Uber, Kalanick and some members of his team. The Board of Directors has finally taken action but it feels like its a day late and a dollar short.  Why did it take so long?  I have bluntly used the epithet that “Uber is Trump,” but now on reflection, it is more apt to describe Uber as Enron the sequel, and “deja vu all over again.” Remember the audio of two Enron electricity traders laughing about “screwing grandma?” That is Uber.

Culture Trumps Strategy

So as the current management adage says, culture trumps strategy.  This is not simply about the bad behavior of a few individuals and that eliminating them will solve Uber’s problems. The aggressive, confrontational business strategy is itself an integral and inextricable part of the problem. Some have said that Uber has a good business model and deserves to succeed.  I dispute that.  Jeremy Rifkin’s Third Industrial Revolution describes his vision for a new sharing economy.  The book has been read by world leaders and praised for its insights into a bright new evolving economy.  Uber and other companies like it have morphed the sharing economy into something ugly.

Uber morphed the sharing economy into “the gig economy,” epitomized by jobs without security or benefits, and the now viral video of Kalanick berating an Uber driver who was going bankrupt. SFGate also exposed the Uber operating strategy of psychologically manipulating drivers to work more hours than intended. The central principle of Kalanick’s business strategy is what he euphemistically describes as “principled confrontation.” Uber enters a market without following any existing rules or regulations, simultaneously entering into negotiations with municipalities which are typified by stalling tactics from Uber, and no intention to conclude an agreement. Uber’s goal is to take over the market by force, making any agreements with municipalities unnecessary. While pursuing its strong-arm goal, Uber has used a software tool, Greyball, to evade law enforcement. Uber is now under criminal investigation for the use of Greyball. Even the notion that Uber somehow improves traffic congestion has been debunked by a Northwestern University study commissioned by the San Francisco Transportation Authority which found that ride sharing has a heavy negative impact on San Francisco’s traffic congestion. See www.sfcta.org/TNCsToday

Uber is also facing a major lawsuit from Google for expropriating Google driverless car technology by hiring one of Google’s engineers. Uber has now fired the engineer in question, but the firing itself may be a circumstantial admission that its intent was to steal Google IP.  In another case, nearly 200 Uber employees were encouraged to use fake ID, burner phones and credit cards to sabotage Lyft, by booking and then quickly canceling more than 5000 rides with Lyft. Then there is the matter of what can now only be described as pervasive sexual harassment within Uber. Adding to all of these issues, local communities have begun to resist Uber much more aggressively. In one example, a protest movement in Oakland is opposing Uber’s plan to open offices in Oakland. There are other examples dotted around the World. Finally, there is the unresolved matter of the status of Uber’s drivers as “independent contractors or employees” which is nearing a final decision in California state and federal courts.

Clearly, Uber’s business strategy is driven by its ugly corporate culture. Stepping back to consider the complete picture, Uber’s business strategy looks to me like a house of cards.

Uber’s Leadership Conundrum

Those who know me and my blogs here know that I am a student of Harvard Business School professor John Kotter and his philosophy of leadership with humility at its core.  Uber presents a leadership conundrum for me. I was interested to hear BackChannel journalist Jessi Hempel express the same point tonight on PBS Newshour.  Uber obviously urgently needs to change its culture, yet without the wild aggressive culture defined by Kalanick, the question remains whether Uber can survive? It is not clear to me that humility could turn the Uber cultural battleship. There have also been a number of business articles suggesting that changing a corporate culture is far more challenging than changing a corporate strategy. So I am left to ponder Peter Drucker’s Four Quadrants of Managerial Behavior, and Quadrant Four’s “high task, low relationship” model for Uber. I learned this in Intel’s M Series management courses years ago. The course used the case study of the film “12 O’Clock High,” a demoralized B-17 bomber unit as its example. Gregory Peck arrives as the new unit commander and begins by “kicking ass and taking names.”  A similar case would be George Patton’s arrival in North Africa to take command of a demoralized tank unit.  My sense at the moment is the only best hope is that somehow an interim leader at Uber will have the latitude to take whatever actions he deems necessary to right the ship.  Such a solution seems doubtful at the moment.

Business Ethics Missing in Action

This morning on NPR’s Morning Edition, Nina Kim interviewed the Director of the Markulla Center for Applied Ethics at Santa Clara University, Kirk Hansen. The Center is named for early Intel and Apple executive, Mike Markkula. Mr. Hansen said that “Uber will undoubtedly become one of the most important business case studies” to emerge from Silicon Valley. Hansen went on to point out that founders of startups are often not capable of taking the company to a mature large company, and that it may be necessary to remove or reassign the founder. In the case of Uber, this is impossible because Kalanick and his founder group have the majority of shares.  This contrasts with most startups legal framework, where the investors or Board may hold the right to remove the founder in specific circumstances.

The Smartest Guys in the Room

As a grey-haired Silicon Valley alumni, I am personally offended and outraged by what has happened at Uber. I am deeply ashamed. Over the years I have worked for some well-known SV companies, startups, VC firms, and my own consultancy. I have personal knowledge of things that happened that were not kosher, and I have been present in situations where the ethics were not the best, but nothing in my Silicon Valley experience rises to the level of Uber. Something has gone wildly out of control since my time with how we conduct ourselves in business, and it is now tarnishing the history and reputation of fifty years of Silicon Valley achievements. From my own personal experience working at one wildly successful company years ago, and after rewatching the Enron documentary video,  “The Smartest Guys in the Room,” the answer is simple: too much money.

 

Source: Uber CEO Kalanick likely to take leave, SVP Michael out: source | Reuters

TECHNOLOGY NEWS | Mon Jun 12, 2017 | 4:22pm ED

By Heather Somerville and Joseph Menn | SAN FRANCISCO | Reuters

Uber Technologies Inc [UBER.UL] Chief Executive Travis Kalanick is likely to take a leave of absence from the troubled ride-hailing company, but no final decision has yet been made, according to a source familiar with the outcome of a Sunday board meeting.

Emil Michael, senior vice president, and a close Kalanick ally has left the company, the source said.

At the Sunday meeting, the company’s board adopted a series of recommendations from the law firm of former U.S Attorney General Eric Holder following a sprawling, multi-month investigation into Uber’s culture and practices, according to a board representative.

Uber will tell employees about the recommendations on Tuesday, said the representative, who declined to be identified.

The company is also adding a new independent director, Nestle executive, and Alibaba board member Wan Ling Martello, a company spokesman said.

Holder and his law firm were retained by Uber in February to investigate company practices after former Uber engineer Susan Fowler published a blog post detailing what she described as sexual harassment and a lack of a suitable response by senior managers.

The recommendations in Holder’s firm’s report place greater controls on spending, human resources and other areas where executives led by Kalanick have had a surprising amount of autonomy for a company with more than 12,000 employees, sources familiar with the matter said.

Kalanick and two allies on the board have voting control of the company. Kalanick’s forceful personality and enormous success with Uber to date, as well as his super-voting shares, have won him broad deference in the boardroom, according to the people familiar with the deliberations.

Uber CEO Travis Kalanick speaks to students during an interaction at the Indian Institute of Technology (IIT) campus in Mumbai, India, January 19, 2016. REUTERS/Danish Siddiqui/File photo

Any decision to take a leave of absence will ultimately be Kalanick’s, one source said.

The world’s most valuable venture-backed private company has found itself at a crossroads as its rough-and-tumble approach to local regulations and handling employees and drivers has led to a series of problems.

It is facing a criminal probe by the U.S. Department of Justice over its use of a software tool that helped its drivers evade local transportation regulators, sources have told Reuters.

Last week, Uber said it fired 20 staff after another law firm looked into 215 cases encompassing complaints of sexual harassment, discrimination, unprofessional behavior, bullying and other employee claims.

SILICON VALLEY SHOCK

Even a temporary departure by Kalanick would be a shock for the Silicon Valley startup world, where company founders in recent years have enjoyed more autonomy and often become synonymous with their firms.

Uber’s image, culture, and practices have been largely defined by Kalanick’s brash approach, company insiders and investors previously told Reuters.

Uber board member Arianna Huffington said in March that Kalanick needed to change his leadership style from that of a “scrappy entrepreneur” to be more like a “leader of a major global company.” The board has been looking for a chief operating officer to help Kalanick run the company since March.

The debate over Kalanick’s future comes as he is also facing a personal trauma: His mother died last month in a boating accident, in which his father was also badly injured.

Michael, described by employees as Kalanick’s closest deputy, has been a recurring flashpoint for controversy at the company.

He once discussed hiring private investigators to probe the personal lives of reporters writing stories faulting the company. Kalanick disavowed and publicly criticized the comments.

Michael will be replaced as the company’s top business development executive by David Richter, currently an Uber vice president, the company spokesman said.

Alongside Uber’s management crisis, its self-driving car program is in jeopardy after a lawsuit from Alphabet Inc alleging trade secrets theft, and the company has suffered an exodus of top executives.

One Uber investor called the board’s decisions on Sunday a step in the right direction, giving Uber an “opportunity to reboot.”

Trump’s radical new foreign policy portends much worse to come

Trump Blows Off the Rest of the World

Trump Climate Change Speech More About Political Power Than Climate Change

Donald Trump and Philippine President Rodrigo Duterte

Fareed Zakaria has pointed out this week in the Washington Post and on CNN GPS, that we now have a Trump foreign policy doctrine, and it is not reassuring for the World. It is openly declaring its intent to destroy the World as we know it. New York Times Conservative columnist David Brooks reached the same conclusion. Obviously heavily influenced by Bannon, who many had thought had been relegated to backseat status by McMaster, we have been fooled again. As Trump demonstrates his Henry Kissinger RealPolitik admiration for authoritarians like Putin, Xi Jinping, Erdogan, and Duterte, more sinister scenarios begin to crystallize.  Trump’s speech justifying the withdrawal of the United States from the COP21 Paris Climate Change Agreement is a frightening exposition of this new Trump Doctrine. It is Trump thumbing his nose at the World. It is the United States against the World, led by a coterie of plutocrats and their money.  It was moved along by a campaign carefully crafted by fossil fuel industry players, most notably Charles D. Koch and David H. Koch, the Kansas-based billionaires who run a chain of refineries (which can process 600,000 barrels of crude oil per day) as well as a subsidiary that owns or operates 4,000 miles of pipelines that move crude oil. The reality is that the evidence points to an ongoing seizure of executive power by Trump that destroys our Constitution in the name of our national security.  The big rhetorical question is what we can do about it?

Read more: Gary Cohn and H.R. McMaster Wall Street Journal editorial: The New Trump Foreign Policy Doctrine

Read more: Fareed Zakaria Washington Post editorial: Trump’s radical departure from postwar foreign policy – The Washington Post

Read more: David Brooks New York Times editorial:

Read more: